Last checked at 28 Sep 2010 11:30
LONDON FINANCE & INVESTMENT GROUP P.L.C. ("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2010
London Finance & Investment Group P.L.C. , the investmentcompany whose assets primarily consist of three Strategic Investments and aGeneral Portfolio, today announces its Preliminary Results for the year ended30th June 2010. Chairman's statementLonfin is an investment company whose assets primarily consist of threeStrategic Investments and a General Portfolio. Strategic Investments aresignificant investments in smaller UK quoted companies and these are balancedby a General Portfolio, which consists mainly of investments in major U.K. andEuropean equities.
At 30th June 2010, the three Strategic Investments, in which we have board representation, were our associated company Western Selection P.L.C. and MWB Group Holdings Plc and Finsbury Food Group plc. Detailed comments on our Strategic Investments are given below.
Our objective is to achieve capital growth in real terms over the medium term, while maintaining a progressive dividend policy.
We are operating in difficult times. Stock markets are volatile and many companies have been cutting dividends. We are not immune to these external factors. In spite of this the Group is in a reasonable position:
* The General Portfolio is yielding 2.9% (2009 - 3.13%) * Borrowings are 23% (2009 - 30%) of the value of liquid stock market investments
* There is significant upside potential in all of our strategic investments
* Operating costs have been reduced and are expected to fall further in the
current year ResultsFollowing a review of accounting policies, the investment in our associatedcompany, Western Selection PLC ("Western"), and our strategic investments arenow valued at market value, with the changes to market value reflected in theincome statement under IAS39 (rather than directly to reserves) Comparativeshave been restated and there is no net effect of these changes on net assets at30th June 2009, but a reduction in profit after exceptional items, tax andminority interests for the year ended 30th June 2009 by £4,512,000, offset byan equal increase in other comprehensive income.Our net assets per share have increased 9% to 23p from 21p last year,reflecting the recovery in general portfolio and associated company values, butincluding a reduction in value of the Strategic Investments. These declined invalue by 24%, our General Portfolio and Western increased by 25% and 23%respectively, after taking into account additions and disposals of investments.The General Portfolio increase of 25% compares with the increases in the FTSE100 index of 16% and a decrease in the FTSE Eurofirst 300 index of 14% over theyear.The Group achieved a profit before tax for the year of £705,000 (2009 - loss -£5,031,000). Our operating income was higher due to profits realised on salesof investments, whilst dividend income was substantially lower followingdisposals at the end of the previous year and lower or passed dividends frominvestments reflecting the state of European economies. The profit afterexceptional items, tax and minority interest was £693,000 (2009 - loss - £5,020,000) giving a profit per share of 2.2p (2009 - loss - 16.1p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,864,412 shares, being 43.8% of the issued share capital of Western and 3,785,820 of Western's 2010 warrants
On 6th September 2010, Western announced a loss before associates andexceptional items of £151,000 for its year to 30th June 2010 (2009 - loss - £479,000). Western has recovered £279,000 of the impairment provisions of £546,000 made last year against some of its general portfolio investments.Including associates and after exceptional items and tax, profits per sharewere 1.4p (2009 - losses 4.8p).
Western has paid an interim dividend of 0.65p and proposes an equal rate for a final dividend. Western's net assets at market value were £10,935,000, equivalent to 61p per share, an increase of 22% from 50p last year.
Our share of the net assets of Western including the value of Western'sinvestments at market value, was £4.8 million (2009 - £3.9 million). The fairvalue is the market value of £2,672,000. This represents 36% of the net assetsof the Group.
Mr. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale, the chief executive of our associated company (City Group P.L.C.), are non-executive directors. Western has strategic investments in Creston plc, Northbridge Industrial Services plc, Swallowfield plc and Hartim Limited. An extract from Western's announcement of its strategic investments is set out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within its
sector both by organic growth and through selective acquisition to become
a substantial, diversified marketing services group. The audited results for the year to 31st March 2010, show a profit after tax of £5,133,000 (2009 - £6,597,000), equivalent to fully diluted earnings of 8.74p per share (2009 - 12.2p). On 28th June 2010 Creston announced the strategic
proposed disposal of DLKW, its advertising agency. Western maintained it's
holding of 3,000,000 shares in Creston (4.9%) with a value at 30th June
2010 of £2,752,000 (2009 - £1,920,000) being 25% (2009 - 21%) of Western's assets. Northbridge Industrial Services PLC Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment supplying a non-cyclical customer
base including utility companies, the public sector and the oil and gas industries. In particular it will seek to acquire specialist businesses
that have the potential for expansion into complete outsourcing providers.
Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and
Korea;Northbridge also has subsidiaries operating in Dubai and Azerbaijan.
Northbridge announced profits of £1,571,000 for the year ended 31st December 2009 (2008 - £1,918,000) and declared a final dividend of 2.7p per share, making 4.1p for the year (2008 - 3.9p). On 30th June 2010,
Northbridge announced the proposed raising of approximately £15 million by
way of an open offer in order to acquire Tasman Oil Tools Pty Ltd, based
in Perth, Western Australia, which specialises in the rental of equipment
for the onshore and off-shore oil industry throughout Australia. Western has taken up 325,000 shares in that offer at a cost of £406,250,
increasing its holding to 2,200,000 shares in Northbridge, which is 14.39%
of the issued share capital. The value of the investment at 30th June 2010
was £2,508,000 (2009 - £2,156,000) being 23% (2009 - 24%) of Western's assets. Swallowfield plc Swallowfield is a market leader in the development, formulation, manufacture and supply of cosmetics, toiletries and related household products for global brands and retailers operating in the cosmetics, personal care and household goods market. Swallowfield announced its interim results to January 2010 showing a profit after tax of £533,000
compared to £449,000 for the comparable period last year. Dividends of £
87,000 (2009 - £77,000) were received from Swallowfield during the year.
Western increased its holding in Swallowfield during the year, and since
the year end, and now owns 1,582,649 shares which is 13.99% of the issued
share capital. The market value of the Company's holding in Swallowfield
on 30th June 2010 was £1,816,000 (2009 - £999,000), being 17% (2009 - 11%) of Westerns' net assets. Western would like to see the Swallowfield Board strengthened and remain in discussions with the company and other major shareholders about the
composition of the Swallowfield board. Western has submitted a resolution
for discussion at the next Swallowfield AGM requesting that the Swallowfield Board increases in size from 5 to 7 by the appointment of additional non-executive directors with relevant skills and experience. Since the resolution was submitted, Swallowfield have announced the appointment of an additional non-executive director and Western look forward to being introduced to him. Hartim Limited Hartim is the unquoted holding company for Tudor Rose International
Limited ("TRI") which was founded in 1984. It works closely with a number
of leading UK branded fast moving consumer goods companies, offering a complete sales, marketing and logistical service. Based in Stroud, Gloucestershire, TRI sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China. Western holds 49.5% of Hartim, which has a 31st December year end and
achieved profits in 2009 of £335,000 after tax on turnover of £20,422,000.
Western's share of the consolidated profit after tax for the twelve months
to 30th June 2010 was £150,000 (2009 - £181,000) and the book value of the
investment at 30th June 2010 was £1,129,000 (2009 - £979,000), being 10%
(2009 - 11%) of Western's assets.
MWB Group Holdings Plc ("MWB")
The Group holding in MWB was unchanged from the 2 million shares held at June2010, representing 1.22% of MWB's issued share capital. The market value at30th June 2010 was £795,000, compared with the book value of £1,681,000, andrepresents 11% of the net assets of the Group.MWB is in the process of maturing and realising its assets for the benefit ofall stakeholders through an orderly disposal programme. Mr. Marshall is anon-executive director of MWB and the board constantly reviews the programme ofdisposal.
Finsbury Food Group plc ("Finsbury")
The Group holding in Finsbury remains at 8 million shares, representing 15.18%of their share capital. The market value of the holding was £1,200,000 on 30thJune 2010 (cost - £1,893,000) and represents 16% of the net assets of theGroup.Finsbury is one of the largest suppliers of premium cakes, bread and morninggoods in the UK. The Group currently supplies most of the UK's majorsupermarket chains, including Asda, Morrisons, Sainsbury, Somerfield, Tesco andWaitrose.
Mr. Marshall and Mr. Beale, the Chief Executive of our associated company City Group P.L.C., are non-executive directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30th June 2010 are listedon page [9]. The General Portfolio is diverse with material interests in Foodand Beverages, Oil, Natural Resources, Chemicals, and Tobacco. We believe thatthe portfolio of quality companies we hold has the potential to outperform themarket in the medium to long term, especially in respect our Western Europeanholdings.The number of holdings in the General Portfolio has decreased to 25 from 29. Wehave decreased the amount invested in the General Portfolio by £669,000 (2009:decreased by £717,000) over the year.We have a £2 million bank facility in addition to the facility to cover theincreased investment in Western, and at 30th June 2010 had drawn down £1.8million. This leaves £200,000 available for further investment when the Boardfeels appropriate. The increase in value of our investments over the period hasdecreased borrowings as a percentage of the market value of all stock marketinvestments from 29% to 23%.Dividend
The declared dividend is 0.30p per share, making 0.60p for the year (2009 -nil). Subject to member's approval, the dividend will be paid on 12th November2010 to those members registered at the close of business on 22nd October 2010.Shareholders on the South African register will receive their dividend in SouthAfrican Rand converted from sterling at the closing rate of exchange on 27thSeptember 2010.Salient dates for dividendLast day to trade (SA) Friday 15th October 2010 Shares trade ex dividend Monday 18th October 2010 (SA) Shares trade ex dividend Wednesday 20th October (UK) 2010 Record date (UK & SA) Friday 22nd October 2010 Pay date Friday 12th November 2010 Currency conversion date Friday 27th September 2010
Shareholders are hereby advised that the exchange rate to be used will be GBP 1 = ZAR11.0990.
This has been calculated as the average of the bid/ask spread as at 16h00 (United Kingdom time) being close of business on 27th September 2010. Consequently the dividend of 0.30p will be equal to 3.3297 South African cents.
No dematerialisation or rematerialisation of share certificates, nor transfer of shares between the registers in London and South Africa will take place between Monday, 18th October 2010 and Friday 22nd October 2010, both dates inclusive.
Outlook
The outlook for stock markets remains very uncertain. We have seen some risesrecently, but are concerned that these may prove to be transitory. We willcontinue to adopt a cautious stance, with our general portfolio invested in
thebest European companies.By Order of the BoardCITY GROUP P.L.C.Secretaries28th September 2010
Consolidated Comprehensive Income Statement
For the year ended 30th June 2010 2009 Restated £000 £000 Dividends - Listed investments 174 536 Interest receivable 1 6 Rental and other income 86 79 Profits/(Losses) realised on sales of investments 119 (45) Management services fees 405 418 ---------- ---------- Operating income 785 994 Administration expenses (757) (851) ---------- ---------- Operating loss 28 143 Exceptional change in fair value of investments 791 (5,023) Interest payable (114) (151) ---------- ---------- Profit/(Loss) on ordinary activities before taxation 705
(5,031)
Tax on result of ordinary activities (18)
- ---------- ---------- Profit/(Loss) on ordinary activities after taxation 687 (5,031) Equity minority interest 6 11 ---------- ---------- Profit/(Loss) for the financial year attributable to 693
(5,020)
members of the holding company
Other comprehensive income Expenses of capital re-organisation - (10) ---------- ---------- Total comprehensive income attributable to shareholders 693 (5,030) ====== ====== Basic profit/(loss) per share 2.2p (16.1)p Headline (loss) per share (0.3)p (0.0)p
All profits and losses are on continuing activities.
Consolidated Statement of Changes in Shareholders' Equity
Share of undistributed Retained Ordinary Share Unrealised
results of realised
share premium Revaluation profits/
Subsidiaries profits &
capital account Reserve (losses) losses investments Total £000 £000 £000 £000 £000 £000 £000 Year ended 30th June 2009 Balances at 1st July 1,560 2,328 330 2,153 452 5,237 12,060 2008 Prior year - - - (1,668) 366 1,302 - restatement ---------- ---------- ---------- ----------
---------- ---------- ---------
Restated balances at 1,560 2,328 330 485 818 6,539 12,060 1st July 2008 Total comprehensive - (10) - (5,023) (71) 74 (5,030)income ---------- ---------- ---------- ----------
---------- ---------- ---------
Dividends paid in - - - - - (202) (202)respect of the previous year Interim dividend - - - - - (172) (172)paid ---------- ---------- ---------- ----------
---------- ---------- ---------
Total transactions - - - - - (374) (374)with shareholders ---------- ---------- ---------- ----------
---------- ---------- ---------
Balances at 30th 1,560 2,318 330 (4,538) 747 6,239 6,656 June 2009 ====== ====== ====== ====== ====== ====== ======
Year ended 30thJune 2010
Balances at 1st 1,560 2,318 330 (4,538) 747 6,239 6,656July 2009 ---------- ---------- ---------- ---------- ---------- ---------- --------- Total comprehensive - - - 791 44 (142) 693income ---------- ---------- ---------- ---------- ---------- ---------- --------- Interim dividend - - - - - (93) (93)paid ---------- ---------- ---------- ---------- ---------- ---------- --------- Total transactions - - - - - (93) (93)with shareholders ---------- ---------- ---------- ---------- ---------- ---------- --------- Balances at 30th 1,560 2,318 330 (3,747) 791 6,004 7,256June 2010 ====== ===== ===== ====== ====== ===== =====
Consolidated Statement of Financial Position
At 30th June 2010 2009 2008 Restated Restated £000 £000 £000 Non-current Assets Tangible assets 377 390 403 Investments 4,667 4,794 8,784 ---------- ---------- ---------- 5,044 5,184 9,187 ---------- ---------- ---------- Current Assets Listed investments 4,225 3,976 5,726 Trade and other receivables 294 309 319 Bank balance and deposits 17 114 36 ---------- ---------- ---------- 4,536 4,399 6,081 Current Liabilities Trade and other payables: falling due within (2,240) (2,837) (3,107)one year ---------- ---------- ---------- Net Current Assets 2,296 1,562 2,974 ---------- ---------- ---------- Total Assets less Current Liabilities 7,340 6,746 12,161 ====== ====== ====== Capital and Reserves Called up share capital 1,560 1,560 1,560 Share premium account 2,318 2,318 2,328 Revaluation reserve 330 330 330
Unrealised profits and losses on investments (3,747) (4,538) 485
Share of retained realised profits and 791 747 818 losses of subsidiaries Company's retained realised profits and 6,004 6,239 6,539 losses ---------- ---------- ---------- 7,256 6,656 12,060 Minority equity interests 84 90 101 ---------- ---------- ---------- 7,340 6,746 12,161 ====== ====== ======
Consolidated Statement of Cash Flow
For the year ended 30th June 2010 2009 £000 £000
Cash flows from operating activities
Profit/(Loss) before tax 705 (5,031) ---------- ----------
Adjustments for non-cash and non-operating activities -
Finance expense 114 151 Depreciation charges 13 13 Investment provisions (791) 5,023 ---------- ---------- (664) 5,187 ---------- ---------- Taxes paid (18) - ---------- ---------- Changes in working capital
Decrease in trade and other receivables 15
10
(Decrease)/Increase in trade and other payables (122)
98
Decrease in current asset investments 669 717 ---------- ---------- Net cash inflow from operating activities 585 981 ---------- ---------- Cash flows from financing Interest paid (114) (151) Cost of warrant issue - (10) Equity dividends paid (93) (374) Net repayment of loan facilities (475) (368) ---------- ---------- Net cash outflow from financing (682) (903) ---------- ----------
(Decrease)/Increase in cash and cash equivalents (97)
78
Cash and cash equivalents at the beginning of the year 114 36 ---------- ---------- Cash and cash equivalents at end of the year 17 114 ====== ====== Notes1. Earnings per share are based on the loss on ordinary activities after taxation and minority interests and on 31,201,446 shares (2009 - 31,201,133) being the weighted average of the number of shares in issue during the year. 2. The net assets attributable to shareholders, taking investments at market value, are before providing for any tax that may arise on realisation.
3. The financial information in this preliminary announcement of unaudited
group results does not constitute the company's statutory accounts for the years ended 30th June 2010 or 30th June 2009 but is derived from those accounts. The accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Acts 2006
applicable to companies reporting under IFRS. The accounts are prepared
on the historical cost basis, except for certain assets and liabilities
which are measured at fair value, in accordance with IFRS. The audited accounts of the group for the year ended 30th June 2009 have been reported on with an unqualified audit report and have been delivered to the Registrar of Companies. Enquiries to:London Finance & Investment Group 020 7448 8950
David Marshall / Edward Beale
LONDON FINANCE & INVESTMENT GROUP PLC